Gold prices surged to a new all-time high of approximately $3,010 during the Asian session on Tuesday, marking the second consecutive day of gains and the fifth positive move in six days. This record-breaking surge in the yellow metal comes amid growing uncertainties surrounding geopolitical tensions and fears of an economic slowdown.
The escalation of the Israel-Gaza conflict, with the Israel Defense Forces (IDF) conducting extensive strikes in Gaza, has fueled further safe-haven demand for gold. Tensions in the Middle East, exacerbated by the failure to extend the Gaza ceasefire and the potential for further conflict, continue to drive investors toward gold as a stable asset.
Additionally, concerns about the U.S. economy have increased after U.S. Treasury Secretary Scott Bessent suggested that a recession could still be possible this year. This has bolstered demand for traditional safe-haven assets, further supporting gold prices.
Meanwhile, market expectations for U.S. interest rate cuts have also been a key factor. Weak consumer spending data released on Monday, including a disappointing retail sales report, has heightened anticipation that the Federal Reserve will resume its rate-cutting cycle. The Federal Reserve’s decision is expected to support gold, which thrives in low-interest-rate environments.
However, a modest rebound in the U.S. Dollar and a generally risk-on sentiment in the markets, fueled by optimism surrounding China’s economic stimulus, may limit further gains in gold. The dollar has regained some strength after hitting a five-month low, and traders are awaiting the Federal Open Market Committee’s (FOMC) meeting this week for clues on future monetary policy.
Gold’s recent climb is also a response to the risk of further escalation in the Russia-Ukraine conflict. U.S. President Donald Trump has expressed optimism for a ceasefire and peace talks between Russia and Ukraine, but the situation remains fluid.
Looking ahead, traders are eyeing Tuesday’s U.S. economic data, including Building Permits, Housing Starts, and Industrial Production figures. However, the focus will remain on the outcome of the FOMC meeting, which is expected to have a significant impact on the U.S. Dollar and provide direction for gold prices.
From a technical perspective, gold’s move above the psychological $3,000 level may attract further buying interest, although the daily Relative Strength Index (RSI) suggests that the market may be slightly overbought. Traders may opt for some consolidation or a modest pullback before positioning for further gains. Any correction below the immediate support level of $2,980 could be viewed as a buying opportunity, with potential support at $2,956. A break below this level could see gold prices testing the $2,930–$2,928 zone, with further downside potential toward the $2,900 level.
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